Mr. Andrew Thomson reports

PALAMINA ANNOUNCES COLT SILVER CORP. SPIN OUT TRANSACTION

Palamina Corp.'s board of directors has unanimously approved a spinout transaction, whereby Palamina will distribute a certain number of common shares of a newly created wholly owned subsidiary named Colt Silver Corp. to the shareholders of Palamina pursuant to a plan of arrangement under Section 182 of the Business Corporations Act (Ontario). Colt Silver owns the company's seven silver-copper projects in northeastern and southeastern Peru. As part of the spinout transaction, the company will complete a series of private placement financings and apply for listing of the common shares of Colt Silver on the TSX Venture Exchange as a Tier 2 mining issuer.

Reasons for the transaction:

• Palamina began acquiring these projects in 2017, where most have been acquired through staking, where there are no underlying payments and funds go into the ground.
• Through this strategic spinout, Palamina shareholders will receive immediate shareholder value of 0.33 of a share of Colt Silver for each Palamina share owned.
• Palamina shareholders will continue to retain the same ownership percentage of Palamina as they hold currently.
• Shareholders will have exposure to two public companies, one focused on Palamina's gold assets and one focused on Colt Silver's silver and copper assets.
• There will be enhanced management focus and expertise on the different mineral exploration assets.

Terms of the Transaction

Palamina, Colt Silver and Palamina Finco Corp. will enter into an arrangement agreement whereby:

• Colt Silver will immediately complete a private placement offering of convertible debentures for up to $500,000 in gross proceeds that bear interest at a rate of 5 per cent per annum and will automatically convert into common shares of Colt Silver immediately prior to the effective date of the plan of arrangement based on a price of 10 cents per share.
• Finco will complete a private placement financing of subscription receipts for up to $2.25-million in gross proceeds, which, subject to meeting all conditions, will automatically convert into common shares of Finco and then be exchanged for common shares of Colt Silver immediately prior to the effective date of the arrangement at a rate of 15 cents per share.
• Palamina will complete the arrangement whereby Palamina shareholders will receive 0.33 share of Colt Silver for every one share held in Palamina.
• Pursuant to the arrangement, holders of Palamina warrants following closing will be entitled to exercise their warrants for one share of Palamina and 0.33 share of Colt Silver.
• Palamina will retain 10 per cent of issued and outstanding common shares of Colt Silver upon completion of the arrangement.
• Upon completion of the arrangement, it is expected that Palamina shareholders will hold between 60.8 per cent and 65.7 per cent, Palamina will hold 10 per cent, and the shareholders resulting from the financings will hold approximately 39.2 per cent of the issued and outstanding shares of the resulting issuer.

Palamina will call an annual and special meeting of shareholders to be held at the end of the second quarter to approve its annual meeting matters, the arrangement, the board of directors of Colt Silver, an option plan for Colt Silver, and certain option grants to directors and officers of Colt Silver. The arrangement is subject to the approval of not fewer than two-thirds of the votes cast by Palamina shareholders. The arrangement is also subject to, among other conditions, the interim and final approval of the Ontario Superior Court of Justice (commercial list), the acceptance of the TSX Venture Exchange, listing of the common shares of Colt Silver on the TSX-V, completion of the financings, and satisfaction of certain other closing conditions that are customary for a transaction of this nature. Listing of the common shares of Colt Silver remains subject to TSX-V acceptance. The spinout transaction is anticipated to close in July, 2026.

A management information circular providing details regarding the spinout transaction, Colt Silver and the assets, and the other matters to be considered at the shareholder meeting, will be mailed to the Palamina shareholders in accordance with regulatory requirements.

Description of the assets part of the spinout transaction

Colt Silver (an Ontario corporation) holds 100 per cent of the shares of Vicus Exploraciones SAC, its Peruvian subsidiary, which holds a 100-per-cent interest in seven property groupings located in northeastern, central and southeastern Peru.

Four of these projects are located in southeastern Peru in the Santa Lucia mining district, within a two-hour drive of the company's field office in the city of Juliaca: Galena, Esperanza, Volcano and Sora silver-copper projects. As part of the spinout transaction, a National Instrument 43-101 report on the Galena silver-copper-manganese project is under way. Once the spinout transaction is approved, an inaugural drilling program is planned to test for silver-copper-manganese mineralization within the limestone contact horizon to determine whether it may host a deposit similar to Aftermath Silver Ltd.'s Berenguela silver-copper-manganese project. Berenguela is located northeast of Galena within the same carbonate replacement deposit trend. Colt's Esperanza silver-copper-manganese project is being investigated as a possible extension of the Berenguela deposit. Colt's Volcano and Sora projects were recently increased in size through staking by over 4,500 hectares to cover ground relinquished by Fresnillo PLC between the operating Tacaza mine and the historical Santa Barbara mine. The Sora project is contiguous to Ivanhoe Electric Inc.'s Pinaya copper-gold porphyry-skarn project. All four of these projects have year-round access and excellent access.

The Cristel copper project is located in southeastern Peru, and was acquired to investigate a colour anomaly caused by the oxidation of massive and semi-massive mineralization that locally contains copper. Minsur SA's San Rafael copper-tin deposit located approximately 40 kilometres to the south began as a high-grade copper deposit, and high-grade tin mineralization was discovered at depth beneath the copper deposit.

The Ica copper-gold project is located in west-central Peru and is being investigated for a the iron oxide copper-gold target. The Pluma sediment hosted copper project is in an emerging red-bed-hosted copper district in northeastern Peru. Palamina's strategy is to maintain the Pluma project while Hannan Metals Ltd.'s carries out a drilling program on its adjacent San Martin project.

Currently, Colt Silver has no other assets.

Debenture offering and subscription receipt offering

Debenture offering

Colt Silver intends to complete a non-brokered private placement of up to $500,000 in secured convertible debentures. The debentures will mature on and become payable on Dec. 31, 2026, and bear interest at a fixed rate of 5 per cent per annum, payable in arrears on the maturity date or the day immediately prior to the effective date of the arrangement. The debentures are secured by the assets of the company through a general security agreement and rank equally with all other debentures. On the conversion date, the total amount outstanding of the debentures, including accrued interest, shall automatically convert into shares of Colt Silver at a conversion price of 10 cents per share. All securities issued pursuant to the debenture offering are subject to a statutory hold period and is subject to TSX-V approval.

Subscription receipt offering

In connection with the proposed spinout transaction, Palamina's management will incorporate Finco to complete a concurrent financing of subscription receipts for gross proceeds of up to $2.25-million. On closing of the spinout transaction, the subscription receipts will automatically convert into common shares of the resulting issuer. Pending the closing of the spinout transaction, the proceeds of the subscription receipts will be held in escrow by a trust company and released to the resulting issuer on closing of the spinout transaction. In connection with the subscription receipt offering, Palamina may pay a cash fee of 6 per cent of the gross proceeds and compensation subscription receipts equal to 6 per cent of the number of subscription receipts issued pursuant to the subscription receipt offering. Completion of the subscription receipt offering is a condition of the completion of the spinout transaction. The resulting issuer intends to use the net proceeds of the financings for exploration and advancement of the assets, including additional drilling, core drilling for metallurgical studies, community relations, advance engineering studies, and general corporate and working capital purposes.

A National Instruction 43-101-compliant technical report is being prepared in respect of the Galena silver-copper project and carveout financial statements being prepared and reviewed by the auditor. The company expects to announce a management team and board of directors for Colt Silver shortly, along with a schedule for completion and a record date for the shareholder meeting to approve the spinout transaction. Further details of the capital structure and financial information in respect of Colt Silver will also be included in a subsequent news release and the information circular to be mailed to the shareholders of Palamina.

The technical information herein has been reviewed and approved by Steve Preismeyer, CPG, a qualified person as defined by National Instrument 43-101. Mr. Preismeyer acts as Palamian's lead geological consultant.

About Palamina Corp.

Palamina is a mineral exploration company with gold projects in the Puno orogenic gold belt in southeastern Peru and copper-silver assets across southeastern, northeastern and central Peru through its Canadian subsidiary Colt Silver. Colt Silver is being spun out to unlock additional shareholder value. Palamina trades on the TSX Venture Exchange and the OTCQB.

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